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EU Divided Over €140 Billion Reparations Loan for Ukraine Using Frozen Russian Assets
European Union leaders remain at odds over an ambitious plan to use frozen Russian assets to fund a €140 billion loan for Ukraine, after Belgium blocked the proposal during a summit in Brussels this week. The initiative, designed to finance Ukraine’s military and reconstruction needs for 2026 and 2027, has become a major test of Europe’s political unity and financial resolve amid waning U.S. support for Kyiv.
The proposal would see the EU issue a “reparations loan” backed by roughly €185 billion in immobilised Russian central bank assets held at Euroclear, a Brussels-based securities depository. The funds, frozen since 2022 under Western sanctions following Moscow’s full-scale invasion of Ukraine, currently generate billions in annual windfall profits for Belgium.
However, Belgian Prime Minister Bart De Wever halted progress, citing fears of Russian retaliation and potential legal fallout. Belgium maintains an investment treaty with Moscow that could expose it to international arbitration if the assets are transferred. “If you take the money from my country and it goes wrong, I am not able—and certainly not willing—to pay €140 billion,” De Wever said after the summit. “Those who support this decision must guarantee that the solidarity will be there if things go sour.”
Despite the setback, EU officials agree on the goal: to make Russia, not European taxpayers, pay for the destruction in Ukraine. What remains unresolved is how to do it legally and safely.
Under the plan, Euroclear would transfer the cash to the European Commission, which would then issue the €140 billion loan to Ukraine in tranches tied to spending conditions, such as using the funds to purchase European-made equipment. Ukraine would only begin repayment after Russia ends the war and agrees to pay reparations, allowing Euroclear to eventually reimburse Moscow—a structure Brussels insists does not amount to confiscation.
European Central Bank President Christine Lagarde has warned against any move that could be seen as seizing sovereign assets outright, but has indicated the reparations loan might be feasible with more technical safeguards. EU leaders are also calling for transparency about how much each member state holds in frozen Russian funds and how profits are being used.
Germany and the Netherlands expressed sympathy for Belgium’s concerns but stressed the need for shared risk across the bloc. Hungary has already said it will not participate. French President Emmanuel Macron said technical issues must be resolved but insisted the project remains “on the table.”
With the U.S. scaling back financial support, Europe faces mounting pressure to find long-term solutions. The European Commission is expected to present an updated proposal before the next summit in December, seen as the deadline for a breakthrough.
Ukrainian President Volodymyr Zelenskyy, addressing EU leaders by video, urged swift action. “Ukraine will need this funding at the very beginning of 2026,” he said. “Not everything depends on us—it’s a political decision.”
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Trump Weighs Troop Cuts in Spain and Italy Amid Growing Rift Over Iran War
President Donald Trump said on Friday that he is considering reducing the US military presence in Spain and Italy, widening a dispute with key NATO allies over their opposition to the ongoing war with Iran.
Speaking to reporters in the Oval Office, Trump suggested both countries had failed to adequately support Washington’s military campaign in the Middle East.
“Yeah, probably, I probably will. Why shouldn’t I?” Trump said when asked whether he would withdraw troops from the two countries. He added that Italy “has not been of any help” and described Spain as “absolutely horrible.”
The comments came just one day after Trump floated a similar proposal regarding Germany, following criticism from German Chancellor Friedrich Merz over the administration’s handling of the Iran conflict.
Trump has repeatedly argued that the US-led campaign against Iran serves the security interests of the entire Western alliance. He has expressed frustration that several NATO members have not provided stronger military or political backing, particularly in efforts to counter Iran and reopen the Strait of Hormuz.
According to the latest Pentagon figures, the United States has about 36,000 troops stationed in Germany, roughly 12,600 in Italy and nearly 3,800 in Spain. While Trump did not specify the scale of any potential reductions, reports in US media suggest the cuts under consideration could be substantial.
Tensions with Italy have grown in recent weeks after Prime Minister Giorgia Meloni publicly questioned the war. Trump, once a close ally of the Italian leader, accused her of lacking the courage to fully support the campaign.
Relations with Spain have been strained for longer. Disagreements initially emerged over Madrid’s stance on the war in Gaza and later expanded to include defence spending and NATO commitments. Spain has resisted Trump’s push for alliance members to raise defence spending to 5 per cent of gross domestic product.
Prime Minister Pedro Sánchez has said Spain will only increase military spending when it aligns with national interests. That position has drawn repeated criticism from Washington.
The Trump administration has previously threatened trade measures against Spain and has even raised the possibility of suspending the country from NATO. Reports last week indicated that such discussions have resurfaced amid Spain’s refusal to support the Iran campaign.
The diplomatic tensions come as the war enters its third month, with no clear end in sight. The conflict has disrupted global energy markets, especially after the closure of the Strait of Hormuz. Brent crude settled at around $114 a barrel on Friday, sharply higher than the roughly $70 level seen before the conflict began.
Trump’s latest remarks are likely to deepen divisions within NATO at a time when alliance unity is already under strain.
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Trump Threatens Troop Reduction in Germany Amid Dispute With Chancellor Merz
US President Donald Trump has suggested that the United States could reduce its military presence in Germany, escalating tensions with German Chancellor Friedrich Merz over the handling of the conflict involving Iran.
In a social media post on Wednesday, Trump said Washington was reviewing the possibility of withdrawing some American troops from Germany, with a decision expected soon. The announcement comes amid a growing public disagreement between the two leaders over US strategy in the Middle East.
“The United States is studying and reviewing the possible reduction of troops in Germany,” Trump wrote, signalling that the longstanding American military footprint in Europe’s largest economy could once again be under scrutiny.
Germany hosts some of the most important US military facilities outside the United States, including Ramstein Air Base, the headquarters of US European Command and US Africa Command, and Landstuhl Regional Medical Center, the largest American military hospital abroad.
Trump’s latest warning follows comments by Merz earlier this week, in which the German leader said Washington was being “humiliated” by Iran and questioned the effectiveness of the US approach to the conflict. Merz has repeatedly called for a clearer strategy and a diplomatic resolution to the crisis.
Despite the sharp exchange, Merz said on Wednesday that his personal relationship with Trump remained strong. He added, however, that he had harboured concerns from the outset about the military campaign against Iran.
The two leaders met at the White House in March, shortly after the United States and Israel launched strikes on Iranian targets. At the time, Merz said Germany was prepared to work closely with Washington on future regional strategy, while also warning that a prolonged conflict could inflict serious damage on the global economy.
That concern has intensified as the closure of the Strait of Hormuz continues to disrupt global energy markets. The vital waterway, through which about one-fifth of the world’s oil supply normally passes, has remained effectively shut since fighting began in late February.
“We are suffering considerably in Germany and in Europe from the consequences of the closure of the Strait of Hormuz,” Merz said, urging all sides to seek a resolution.
Trump, however, has shown increasing frustration with Germany’s stance. In a post on Tuesday, he criticised Merz’s remarks on Iran and accused the chancellor of misunderstanding the threat posed by Tehran’s nuclear ambitions.
This is not the first time Trump has threatened to reduce US troop levels in Germany. During his first term, he announced plans to withdraw nearly 10,000 troops, citing Berlin’s defence spending. That proposal was later halted by the Biden administration.
Any renewed reduction would likely raise fresh questions about US commitment to NATO and European security at a time of heightened global instability.
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